Johor-Singapore SEZ offers chance to strengthen supply chains amid tariff uncertainty: DPM Gan

JOHOR BAHRU – The

Johor-Singapore Special Economic Zone (JS-SEZ)

presents an opportunity for businesses to strengthen their supply chains amid uncertainty caused by tariffs, said Singapore’s Deputy Prime Minister Gan Kim Yong.

Mr Gan, who is also Minister for Trade and Industry, was delivering his keynote address at a business and investment forum in Malaysia’s southern state of Johor on April 21, an event he described as “both important and timely” amid rising protectionism globally.

He noted that escalating tensions between the US and China have led to

a volley of tit-for-tat tariffs

, effectively choking off trade between the world’s two largest economies.

These developments will have significant implications on businesses in Singapore and Malaysia, many of which are embedded within the production and supply chains of both the US and China.

A project like the JS-SEZ, though, demonstrates how like-minded countries can work with each other to overcome challenges facing them, he said.

“The JS-SEZ presents an opportunity for businesses to explore how to ‘strengthen (their) supply chains’, so that they can better respond to the volatilities and continue to grow their businesses,” he said.

The JS-SEZ aims to streamline cross-border trade and investment in key sectors such as advanced manufacturing, logistics, technology and the digital economy.

The zone, encompassing 3,571 sq km of land across southern Johor, will offer simplified Customs clearance, harmonised regulations, improved connectivity for both people and goods, and tax incentives for companies there.

“The JS-SEZ builds on the strong, longstanding economic partnership between Malaysia and Singapore to open a new avenue, a new frontier of opportunities for businesses,” Mr Gan said.

This includes companies already in Singapore looking to expand their capacity in the JS-SEZ, those that wish to develop new capabilities in the zone and those choosing to “twin their presence” in both Singapore and Johor.

In particular, on Singapore’s end, the Ministry of Trade and Industry, together with Enterprise Singapore and the Economic Development Board, have established a joint project office to support Singapore-based companies keen to expand and do more in the JS-SEZ. This will complement the Invest Malaysia Facilitation Centre-Johor established by Malaysia.

Malaysian Minister for Investment, Trade and Industry Tengku Zafrul Aziz was present at the Johor Bahru event, which hosted panel discussions on how the JS-SEZ could be an investment powerhouse in Asean, with a role in wealth creation in the region, and giving insights on building supply chain resilience.

In his speech, Datuk Seri Zafrul said while his ministry is still studying the impact of US President Donald Trump’s tariffs, the need for Malaysia and Singapore’s “economic interlinkage” is now “more important than ever”.

“We must be realistic, but we must also guard against undue pessimism,” he said of the tariffs.

“The need for JS-SEZ is obvious, so we’ll continue all out to ensure its success.”

Mr Trump announced so-called reciprocal tariffs on imports on April 2, sparking a flurry of retaliatory measures and trade negotiations. These tariffs on most countries were granted a 90-day pause on April 9, but global trade remains roiled with uncertainty.

Meanwhile, Washington has slapped a 145 per cent tariff on Chinese goods, which Beijing responded to with a 125 per cent tariff on American goods. 

Singapore has drawn a 10 per cent baseline tariff on goods it exports to the US, while Malaysia faces a 24 per cent reciprocal tariff on its exports to the US.

Also in attendance at the forum were Malaysia’s Deputy Minister for Investment, Trade and Industry Liew Chin Tong and Johor’s Menteri Besar, Datuk Onn Hafiz Ghazi.

In his speech, Mr Liew urged shifting away from only thinking of exporting to the US, the world’s largest consumer market, to the other “many potential markets around the world”.

“It is time for us to think about creating technology for Asean, India, Bangladesh, Brazil, for the bottom billions of the world,” he said.

In a panel discussion, Mr Kok Ping Soon, chief executive of the Singapore Business Federation, talked about whether the JS-SEZ can offer tariff arbitrage opportunities where both countries take advantage of each other’s existing policies, such as by using Singapore’s 10 per cent tariff rate with the US to save costs.

He noted that the US accounts for only 13 per cent to 15 per cent of world trade, with the rest of global trade taking place outside of the US. 

“Malaysia has about 16 FTAs. Well, you combine with Singapore’s 27 FTAs, you practically cover the whole world,” he said, referring to free trade agreements.